NZ shares sink as dour earnings highlight soggy economy - Market close

Spark hit a four-year low, falling 1.7% to $3.78. Photo / NZME

New Zealand shares fell as soft earnings from Tourism Holdings and Vulcan Steel highlighted the strains still facing the local economy. Spark New Zealand hit a four-year low.

The S&P/NZX 50 Index dropped 138.72 points, or 1.1%, to 12,451.11. Across the main board, 90 stocks fell, 46 rose and 43 were unchanged. Turnover was $110.6 million, with seven companies trading on volumes of more than a million shares.

The local earnings season continued to highlight how tough domestic economic conditions have been as household budgets remain stretched, and with interest rate relief unlikely to start easing the pain until next year.

“Reporting season has been a bit of a mixed bag and a bit of a reality check,” said Mark Lister, investment director at Craigs Investment Partners. “It’s still a difficult economic environment out there and lots of companies are doing it tough.”

Tourism Holdings dropped 4.8% to $1.98 on a volume of 1.7 million after the rental campervan operator met its sharply reduced earnings guidance and walked back a timeline to achieving a $100m net profit goal as the sector takes longer to recover than previously hoped.

Dual-listed Vulcan Steel slipped 1% to $7.92 with just 51 shares traded on the NZX after reporting a 55% decline in net profit, with volumes down as activity on both sides of the Tasman subsides.

NZME, the publisher of the NZ Herald and BusinessDesk, declined 1% to 96c after noting a soft advertising market when reporting flat operating earnings.

Stock market operator NZX led the benchmark index lower, falling 6.7% to $1.26. The bourse will lose another listing after Z Energy-parent Ampol said it would delist from the NZX and have a sole listing in Australia. Ampol rose 1.2% to $34.40.

Craigs’ Lister said companies more closely exposed to the economy were coming under more pressure than the likes of utilities such as Chorus, which were typically seen as more defensive. The broadband network operator fell 3.4% to $8.355 as it gave up some of yesterday’s 9.2% gain.

Spark decreased 1.7% to $3.78 on a volume of 3 million shares, its lowest close since the March 2020 Covid slump. The mobile and broadband retailer missed its earnings guidance on Friday as reduced spending in the public and private sectors weighed on its IT services business.

Lister said Spark probably didn’t deserve to drop as much as it had, and that the volatility during reporting season could provide buying opportunities.

Vector posted the biggest gain on the NZX50, rising 4.1% to $3.83 after reporting a 14% increase in operating earnings and declaring a special dividend.

Among companies reporting tomorrow, Meridian Energy fell 3.3% to $6.15, Precinct Properties NZ declined 2.2% to $1.31 and Scales Corp slipped 2.3% to $3.44.

Exporters were mixed, with Fisher & Paykel Healthcare down 1.8% to $35.22 and The a2 Milk Co declining 3.7% to $6.18, while Skellerup Holdings gained 1.4% to $4.95 and Delegat Group increased 1% to $5.05.

Rakon, which holds its annual meeting on Wednesday, rose 2.7% to 75c. The company said NZ RegCo wouldn’t be opening an investigation into a complaint about its disclosure over a potential takeover bid.

Minnow smart refrigeration firm AoFrio climbed to a 16-month high, rising 4%, or 0.4 of a cent, to 10.4c, taking its gain this month to 62.5%, or 4c.

Arvida Group was the most heavily traded stock, ending the day unchanged at $1.64 with 6.9 million shares changing hands. Air NZ was unchanged at 56c on a volume of 1.5 million and Auckland International Airport fell 0.4% to $7.58, with 1.1 million shares changing hands.

Ryman Healthcare slipped 0.8% to $4.96 on a volume of 1 million and Kiwi Property Group rose 1% to 97c on a volume of 1 million.